Loans -
Americans face negative equity on car loans - 28/06/2008
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For many years the SUV has been the car of choice for a huge number of Americans. More than any other continent on earth, Americans love their SUVs.
Whereas in Europe, cars outsell SUVs by a ratio of five to one, while in Asia, cars out sell by a ratio of 2 to one, in America the ratio is close to one to one, making SUVs almost as popular as cars in the United States.
However, the recent rises in fuel prices and the cost of living have meant that SUVs have fallen dramatically in popularity.
The running costs associated with such large vehicles have put many owners off, prompting them to look at the option of selling, while potential new owners are often disregarding costly SUVs as an option.
This has caused the value of SUVs to fall significantly, as the demand is simply not there as it was previously.
Due to the fall in value of the average SUV, many Americans are left paying off auto loans which are worth much more than their car's current value.
Falling into negative equity can be a big problem, particularly if you mean to sell the vehicle. For many, even if they secure a scale in a dwindling market, they will still be left with money to pay off on their car loan.
Brian Johnson, analyst for Lehman Brothers said βThe auto downturn appears to be entering a problematic second phase. In this phase, with gas prices remaining stubbornly high, demand for both new and used large pickups and large SUVs is falling precipitously.β
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